THE QUESTION

We are in the process of purchasing a property that we are planning to use as a furnished holiday let (it is already currently used as an Airbnb). 

We will be purchasing it in joint names.  My husband's income is close to tipping into the next tax bracket, whilst mine is far from it.  

I have been told that we would need a deed of trust to say that the taxable income from the property will be in my name i.e. 0% of the income for husband and 100% for me.  However, having looked at the government website it would appear that a deed of trust is not necessary for a furnished holiday let and only for regular rentals.  It would appear that for a furnished holiday let we can just decide between ourselves who's getting the income and pay tax as such. 

Am I reading it wrong? 

THE ANSWER

The simplest solution is to buy it jointly, but set it up on a 'tenants in common' basis rather than the normal 'joint tenants' basis.  I know you are the landlords/owners not the tenants but ...

We’ve been experiencing a sellers’ market for a while in the property market, but it’s about to tip the other way.

I’ve been in property for 40 years now and I’ve seen it switch many times, the vibrant sellers’ market that was in place before the first lockdown ratcheted up as the government introduced a stamp duty holiday and people forced to work at home started looking for a property that offered a better home-working space.  Landlords were outbid as prices soared, but then the high rate of inflation has kicked in and that’s pushed the ‘reverse’ button.

Now sites like Zoopla are reporting a significant drop in searches and estate agents are actively chasing new business instead of sitting behind their desks desperately trying to keep up with the demand for new homes.

The question is not ‘will it become a buyer’s market?’, but how extreme will it become?

The Challenge

For buy-to-let landlords the increasing interest rates are posing a problem.  The market won’t stand increases i...

THE QUESTION

Currently I have a BTL via a limited company, with a value of £124k.  There is £53k outstanding on a repayment mortgage with 12 years remaining.  My current interest deal expires in about three months’ time.

I have no spare cash in bank, the rent literally comes in and pays the bills and what's left pays the annual tax return.

The property has long-term, decent tenants who have  been in residence for three years and plan on staying, although this is not a problem as, if they decide to leave, it will rent easily 

I want another BTL with a value of around £100k and plan to use the equity from the current property to raise the deposit, fees, SD etc (max £30k).  Then to repeat this until I have 5 BTL properties.

Do I switch my current BTL mortgage to interest only and also the new mortgage on interest only?

Or the new mortgage on repayment? 

Or switch the current BTL mortgage to interest only for 12 months, get some capital and look at this again in 12 months when price...

THE QUESTION

I plan to purchase four BTL properties over the next 12-18 months, with a value circa £200,000 each, all on 75% mortgages through my limited company.

Rental income for each will only be around £850 per month, less interest payments and maintenance cost net £500 - £600 max.  I intend to leave the rental income in the company as taking it would push me into an unreasonable tax bracket. 

Property prices in the area I live have doubled within the last 10 years, and will probably do the same over the next 10 years, so using that equation purchase price of 4 = £800,000

Potential value after 10 years = £1.6m

Would you work it differently?

THE ANSWER

Rental income of £850 on a £150k mortgage just about scrapes the required rent to borrow 75%, so it ticks that box.

If you just want 'minimal effort, sit back and let it happen' type of investing and four properties satisfies your landlord portfolio needs, then buying four ready-to-rent £200k properties and parking your £200k ...

If you’ve been building your property portfolio and have an eye on doing a new build project, you need to know the ropes to ensure you finance it properly and make a good profit.

These are my top tips:

Development finance is different

It’s different to most other property finance options and you need to understand how it works.  This kind of finance is no longer available from the banks, who pulled out of it during the 2008 credit crunch.  Most development finance lenders are small specialist lenders who usually only offer this kind of finance.

There are barriers to entry to deter people who are dabbling and ensure only serious investors qualify.

You’ll need experience

This is that Catch-22 situation.  You need experience, but you can’t get experience without the funding to support you.  The lender will expect you to have relevant experience – in other words the same level of development.  For a single or double unit project, you must show that you have successfully built out a s...

If you haven’t bought at auction before it’s easy to be misled by the contents of an auction catalogue.  The challenge is that anyone who watches daytime TV and has seen programmes like Homes under the Hammer can be led to believe that every property auction in the country has lots of fantastic deals just waiting to be snapped up.  This isn’t actually the case.

You may see a property listed in the auction catalogue at 20-30% below market value (or even lower in some cases) and a closer look shows it to be in good nick, with no need to refurb.  That looks like a great deal - buy at 20% BMV and refinance at market value or sell on and get an instant profit.  Sounds too good to be true - because it is!

Before you jump into your first auction you need to understand the hidden cost of buying properties at auction.

1. The guide price - this is the price in auction catalogue and this is the price used as a marketing tool to increase interest.  There is another figure that’s equally importan
...

Property can be a lonely road to travel, unless you happen to work with a partner.  You’re investing big chunks of money and like any solo business, it’s easy to lose your ability to be objective.

Everyone is an armchair ‘expert’ and if you mention ‘property’ in any groups of people you’ll get lots of advice, most of it negative.  If you attend property networking groups at least you’re with like-minded people, but to trust other people’s advice you need time to get to know each other and learn about their background and experience.

What do you do when you need advice?

Support is critical - a trusted forum where you know that people don’t have another agenda and are genuinely interested in giving (and getting) support in their property journey.

The kind of support you need changes as you move along your property journey and that’s why I’ve created a number of options for property investors.

There’s a YouTube channel with lots of videos sharing information and expertise to help inv...

Nobody likes to admit they’ve fallen short and as long as nobody know what you’re aiming to achieve, you never have to stand up and be counted.  But with no fire under you, will you achieve all you hope to?

This isn’t just a property thing - it’s pretty universal - but people who are wannabe investors are many.  They know it’s possible, because other people are successfully investing in many different ways, but they’re not taking action.

What holds them back?

The number one stumbling block is fear.  This is usually fear of failure - and failure when you’re dealing in assets worth hundreds of thousands can be life-changing.  However, sometimes it’s fear of success.  It sounds crazy, but some people worry about what changes they’ll have to make if they are hugely successful.

Procrastination also happens because everyone is different.  Individuals look at other investors and can always find a reason why that investor is different to them - and so that doesn’t mean they’ll experience t...

It’s nearly the end of another year and the time when that ‘quiet’ time between Christmas and New Year is an excellent time to reflect on your year and make plans for the year to come.

So how was 2019 for you?  What did you achieve that made you feel good?  What was in your plan at the beginning of the year, but somehow didn’t get done?

What would you like next year to look like?  And more importantly, what will you need to do to make reality match that?

If you’re reading this, you’re probably either already in property or you’re seriously considering getting into it - and you must be aware that it’s one of the industries where the people outside it are known for being negative about it.  In order to succeed, you’ll need to be able to combat negative input.

To overcome the challenges along the way, you’ll need to develop a positive attitude to dealing with these.  It’s all about seeing a problem as an opportunity, rather than a road-block.

I talk about a ‘Millionaire Mindset’ a lo...

When you’re negotiating with either vendors or estate agents, one of the key negotiation skills is to choose words that hit their ‘hot button’.

If you’ve studied sales you’ll know that there is a process to successful sales transactions.  That same process can be applied to any situation where you want to persuade or influence someone to things your way!

The simplest formula (and it’s been around for a very long time) is AIDA.  This stands for:

Attention:  You can’t sell anything if the other party isn’t paying attention, so that’s the first step - get them to listen to what you’re proposing.  This can be achieved by making eye contact to ensure their attention is with you.

Interest:  Nobody will buy if they’re not interested.  This means you need to know what’s important to this particular person.  What will make them prick up their ears?  Ask the questions to find out before you frame your proposal.  This is sometimes described as ‘what’s in it for me?’ (WIIFM) or as ‘benefits’.